Skip to content

US-China Relations

U.S. to Introduce Regulations Restricting Chinese Automotive Software

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that the U.S. Commerce Department plans to release rules on “connected cars” in August and is expected to impose restrictions on some parts and software produced by China and other countries that are seen as adversaries. The rules will not apply to the entire car, but rather to some management software and key driver components that manage car data. These components must be produced in U.S.-allied countries.

There are a lot of software capabilities in modern smart cars. They may be able to take photos, engage with the driving system, connect to smartphones, and know where the car is going. In May of this year, U.S. Commerce Secretary Gina Raimondo said that, after the U.S. government’s risk assessment on Chinese car imports, “extreme actions” may be taken to ban or restrict Chinese-made cars. California’s privacy regulatory authority said it would examine the growing amount of data collected by smart cars.

The Chinese Ministry of Foreign Affairs has urged the United States to “respect the laws of the market economy and the principles of fair competition.” China call on the United States to stop its “generalization of the concept of national security” and to “stop discrimination against Chinese companies.”

Source: NetEase, July 17, 2024
https://www.163.com/dy/article/J7AR2HKC051481US.html

China Times: China Announces Suspension of Talks with U.S. on Arms Control and Non-Proliferation

Major Taiwanese newspaper China Times recently reported that Mainland China is dissatisfied with the United States’ continued arms sales to Taiwan. China just announced that it has suspended negotiations with the United States on nuclear non-proliferation and on arms control issues.

The United States and China held arms control and non-proliferation talks in Washington last year. As of last week, however, China’s Ministry of Foreign Affairs stated at a press conference that the United States “has ignored China’s firm opposition by continuing arms sales to Taiwan. This has seriously damaged China’s core interests, undermined political mutual trust between the two sides, and seriously undermined the political atmosphere for the two sides to continue arms control talks.”

The Taiwanese Ministry of Foreign Affairs said it pays close attention to the exchanges and dialogues between the United States and China. The Taiwanese Ministry of Foreign Affairs had no comment on the recent statement from Beijing.

Source: China Times, July 18, 2024
https://www.chinatimes.com/cn/realtimenews/20240718002264-260407?chdtv

UDN: China Sanctions Six US Companies and Five Executives

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, due to dissatisfaction with the U.S. arms sales of attack drones to Taiwan in June, the Chinese Ministry of Foreign Affairs just announced it will take countermeasures against six U.S. military companies and five senior executives.

On June 18, the United States announced the sale of two attack drone models to Taiwan, including Switchblade 300 and Altius 600M-V, for a total of US$360.2 million. This is the 15th U.S. arms sale to Taiwan under President Biden. China announced that, according to China’s “Anti-Foreign Sanctions Law”, for six companies, including Anduril Industries, Maritime Tactical Systems, Pacific Rim Defense, AEVEX Aerospace, LKDAerospace, and Summit Technologies Inc., their movable, immovable, and other types of properties in China will be frozen.

For two top executives of AeroVironment and three senior executives of Anduril, China have frozen their movable, immovable and other types of properties in China. China also prohibited organizations and individuals in China from conducting relevant transactions, cooperation and other activities with these individuals, who will not be issued Chinese visa and are not allowed to enter China (including Hong Kong and Macau).

Source: UDN, July 12, 2024
https://udn.com/news/story/7331/8091885

UDN: Amazon E-Book Store Officially Withdraws from China

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, Amazon China announced on its official website on June 30 that the Kindle China e-book store has ceased operations on June 30, 2023, and will stop cloud download services on June 30, 2024. After that, undownloaded e-books will not be available for download. Already downloaded e-books will remain readable on the local Kindle device. Kindle customer service will also remain only until June 30, 2024. After the news of Kindle’s complete withdrawal from the Chinese market came out, many Mainland China netizens expressed regrets on “yet another foreign investor leaves China.”

Amazon initially launched Kindle in 2007, setting off a global e-book reading craze. Kindle officially entered the Mainland Chinese market in June 2013. In 2018, the sales of Kindle Readers in China exceeded one million. Amazon announced in 2022 that its e-book business will withdraw from the Chinese Mainland market in three phases.

Source: UDN, July 1, 2024
https://money.udn.com/money/story/5603/8065269

CNA: Chinese AI Companies Restricting Services Due to Chip Shortage

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, affected by the U.S. chip export ban, Chinese technology companies have reported chip shortages leading to insufficient computing power. These companies are restricting artificial intelligence (AI) related services. This reliance on chip imports may put China’s technology industry at a disadvantage in the AI competition. China’s semiconductor industry may have found a way to produce advanced chips for 5G smartphones, but it has yet to make chips powerful enough to run AI applications. For example, in order to avoid insufficient computing power, China’s short video and live broadcast platform Kwai had to limit the number of users to test its text-generated video model Kling. Kwai uses Nvidia’s A800 chips to train it AI models. AI startup Moonshot that was recently valued at US$3 billion, also warned its users of their popular chatbot that their computing power may be insufficient during peak hours. Companies such as Alibaba, Baidu and ByteDance that offer large-scale language model applications are telling their enterprise customers who need heavy use to wait in line. All above-mentioned companies declined to comment on this matter.

Source: CNA, June 28, 2024
https://www.cna.com.tw/news/aopl/202406280418.aspx

TCL’s Trade Route Shift: Adapting to US Tariffs

TCL Chairman Li Dongsheng addressed the impact of US tariffs on Chinese products at the Summer Davos Forum in Dalian, China. He revealed that TCL has adapted its trade route to maintain sales in the US market, its largest export destination.

Previously, TCL purchased components from the US, manufactured in China, and exported back to the US. However, due to increased tariffs, TCL now buys chips and materials from the US, processes core components like displays in China, then ships semi-finished products to Vietnam, Mexico, and Indonesia for final assembly before exporting to the US.

This new multilateral trade route has maintained TCL’s US sales but has extended the process and increased costs, potentially contributing to US inflation issues.

Li emphasized the importance of balancing interests in economic globalization. He suggested Chinese companies should not only sell products overseas but also invest, create jobs, increase local tax revenue, support local supply chains, and cultivate local suppliers.

Li proposed that Chinese firms should shift from “exporting products” to “exporting industrial capacity,” enhancing awareness and responsibility for promoting local economic development.

Source: Central News Agency (Taiwan), June 25, 2024
https://www.cna.com.tw/news/acn/202406250380.aspx

UDN: China Sanctioned Lockheed Martin Again

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported that, after the United States sold a batch of F-16 fighter jet components to Taiwan, the Chinese Ministry of Foreign Affairs announced that it would take countermeasures against three senior executives of Lockheed Martin and three of its units. China has previously countered arms sales to Taiwan and has repeatedly sanctioned the U.S. arms dealer and its affiliated organizations. The Ministry stated that the United States has recently announced the sale of arms to Taiwan again, seriously interferes in China’s internal affairs, and seriously damages China’s sovereignty and territorial integrity. In accordance with the relevant provisions of China’s “Anti-Foreign Sanctions Law”, it was decided to impose sanctions on Lockheed Martin Missile System Integration Lab, Lockheed Martin Advanced Technology Laboratories, and Lockheed Martin Ventures. Also sanctioned were Lockheed Martin Chairman and CEO, COO as well as CFO. The U.S. Defense Security Cooperation Agency recently announced arms sales to Taiwan, with a total price of US$300 million, including standard spare and repair parts for F-16 fighter jets and related equipment. The F-16 is one of Lockheed Martin’s best-selling products.

Source: UDN, June 21, 2024
https://udn.com/news/story/7331/8046686

Discrepancies in China’s Trade Surplus Data with the U.S.

On June 20, the U.S. Treasury Department asked China to explain the discrepancy in its two sets of trade surplus data with the U.S.

Data reported by the Chinese customs office shows China’s trade surplus for 2023 being nearly $230 billion higher than the surplus reported by China’s State Administration of Foreign Exchange (SAFE). In prior years (going back to 2000), the average discrepancy between these two sources of trade surplus data was only $7 billion. The U.S. Treasury Department called on China to provide further quantitative evidence clarifying the issue.

One commentator on China affairs gave three possible explanations for the large discrepancy in 2023 trade surplus data:

  1. The Chinese customs office may have exaggerated the country’s export trade figures.
  2. A large number of export enterprises may have, in preparation for potential exit from China, kept their dollars overseas instead of taking them back to China (i.e. instead of converting them to RMB). This could have resulted in those businesses’ trade numbers being counted by the customs but not by SAFE.
  3. There may be an acceleration in people withdrawing money to flee China.

Sources:
1. Radio France Internationale, June 21, 2024
https://www.rfi.fr/cn/美国/20240621-美财政部吁中国提高汇率透明度-并澄清贸易顺差数据出现巨额落差
2. Epoch Times, June 22, 2024
https://www.epochtimes.com/gb/24/6/22/n14275135.htm